Glencore subpoenaed for money laundering and corruption

Stock plunges as much as 13% after subpoena from US DoJ.
Request relates to Glencore’s business over past decade. Picture: Alessandro Della Bella/Bloomberg

Glencore Plc tumbled the most in two years as its African troubles escalated dramatically after US authorities demanded documents relating to possible corruption and money laundering.

The world’s biggest commodity trader said Tuesday that it’s been subpoenaed by the US Department of Justice to produce documents with respect to compliance with the Foreign Corrupt Practices Act and United States money laundering statutes. The documents relate to the company’s business in Nigeria, the Democratic Republic of Congo and Venezuela from 2007 to the present. The shares plunged as much as 13%.

It’s been a tumultuous year for Glencore, mostly due to challenges linked to its business in the Congo, where it operates giant copper and cobalt mines. The Swiss company trader and miner is already facing the possibility of a bribery investigation by UK prosecutors over its work with Dan Gertler, an Israeli billionaire and close friend of Congo President Joseph Kabila, people familiar with the situation said in May.

“It’s a very worrying development for any multinational to be subpoenaed by the US Justice Department given their reputation for prosecuting foreign corruption and money-laundering aggressively,” said Daniel Leader, a lawyer for Leigh Day in London. “The DOJ takes a very aggressive stance on jurisdiction so it’s sufficient for the transaction to be in US dollars for them to say they have jurisdiction.”

Glencore said it is reviewing the subpoena and will provide further information in due course as appropriate.

 The shares dropped to the lowest in almost a year and were down 12% by 10:29 am in London.

The announcement has knocked 5.5 billion pounds ($7.3 billion) off Glencore’s market value, about half the $14.8 billion of profit the company made last year.

The DOJ usually issues subpoenas when it is investigating a company. In December, a Swiss court ordered companies controlled by Gertler to hand over bank documents to US Federal prosecutors.

“Given the flow of negative news we’ve had through the course of this year, the knee jerk reaction is worse than it otherwise might have been,” Hunter Hillcoat, an analyst at Investec Securities Ltd., said by phone. “The DOJ fines can be big, but to wipe out 10% of the market cap would be bigger than any fine I can recall.”

The biggest US penalty for foreign corruption was a $965 million payment imposed on Sweden’s telecoms company Telia Company AB after it accepted that it paid hundreds of millions of dollars in bribes to a government official in Uzbekistan.

While Glencore didn’t specify exactly what the DOJ is investigating, it has faced legal challenges in DRC, Venezuela and Nigeria that might suggest where the US authorities are focusing their probe.

Gertler relationship

The company’s relationship with Gertler, who’s under US sanctions over allegedly corrupt deals in Congo, has long been a cause for concern. In Venezuela, Glencore is among oil traders accused of paying bribes to get the inside track on oil deals, according to a lawsuit filed by a trust for Petroleos de Venezuela SA earlier this year. In 2015 a former representative of Glencore alleged that the company failed to pay a fee for helping to free 15 Russian sailors detained on suspicion of smuggling guns.

The company’s problems had seemed to ease last month as it headed off two of its biggest challenges in Congo. Faced with the risk of losing control of its mines, Glencore bowed to the demands from two entities with close government ties — the state-run mining company Gecamines and Gertler.

A spokesman for Gertler declined to comment.

Glencore’s bonds also slumped on the news. The company’s 500 million euros ($583 million) of notes due April 2026 led the decline, falling 3 cents on the euro to 108 cents, the biggest drop in more than two years, according to data compiled by Bloomberg.

“After navigating the recent challenges in the Congo, albeit with a jurisdictional shift in risk from the Congo to the US, this investigation is likely to provide another reason for investors to proceed with caution around the Glencore investment case,” RBC Capital Markets analyst Tyler Broda said in a note to investors.

© 2018 Bloomberg



Sort by:
  • Oldest first
  • Newest first
  • Top voted

You must be signed in and an Insider Gold subscriber to comment.


Private sector is more corrupt than government. They change the term corruption into accounting irregularities. We refuse to accept that. Corruption will always be corruption. If former President is to be sent to jail, Joste must follow him. PLEASE EXPOSE MORE OF THEM

“Private sector is more corrupt than government.” – lol

Lol lol lol…

When the private sector gets the right to extort money out of people when not delivering the promised services in return, we can start to equivocate levels of corruption.

Clown with notable dementia.

Glencore appears to be a company that operates on the edge of the law.

Agree totally – these guys are repeat offenders and at some point action needs to be taken against them that has an impact. They cannot keep fending off regulators by setting up (clearly) toothless Board sub-committees to manage governance & claim all is well when clearly it never has been.

I do a lot of business in African countries. SA is very not favored. It is seen as very arrogant as believing that it has a right to represent all African countries.

Other African countries will jump at any opportunity to nail SA financially or to find a way to put one over. Any chance at all.

Talk about the pot calling the kettle black – Glencore being investigated for money laundering? This from a man who himself is being investigated for the same thing with Russia. C’mon!
This also from a man who is distancing himself from Global Trade Organisations and is now suddenly making a call on a non US company’s trade with African countries?
Perhaps he is trying to corner oil output and price between the US and Saudi Arabia and Glencore won’t pkay ball.
This whole thing stinks – but perhaps a good time to get Glencore at a discount!

From all these negative comments here it seems like you’ve all forgotten what it’s like to do business in Africa! You play by the rules and get shafted – look at MTN, and the other SA businesses that have tried to crack it in Nigeria…hell look at how Glencore/ Exorro got shafted by the South Africa government over Optimum…. Glencore might skate on thin ice but they’re dealing with a bunch of dodgy bastards..sometimes you just have to play by their rules to survive.
In my opinion

Yes. Such is the business of chicanery in African countries. When in Africa do as Africans do, or die.

End of comments.




Instrument Details  

You do not have any portfolios, please create one here.
You do not have an alert portfolio, please create one here.

Follow us:

Search Articles:
Click a Company: